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Another Forex scam comes to light...

I spend a lot of time in forums, mostly to research and discover new ideas for algo trading and to keep abreast of any developments in the area. Myforexbook is a site that most forex traders know about, usually as a place where you can list your trading system and let people see the results. It's a place where people go to, to see your trading track record.

I also like to dig into the other areas, look at systems which are doing well and follow the online discussions to see what useful information I can gleam.

Today, there was a system which was in the top 10 for most followed systems and most discussed systems and had a negative result... interesting, so I dug deeper!

The one listed James Harrison was the one I clicked on... this one had been running since Dec 2017 with a huge capital amount (over $900k) and made crazy gains over the course of it's running (almost 2 and bit years) before crashes spectacularly in 2 days... losing everything! The trades are hidden so I can't confirm it but I have a strong suspicion that this was a Martingale and / or Grid system... these systems double down on every losing trade which make it very difficult to lose if you have a lot of capital but when they go pop, they go by the biggest bang!

In the forums, it's clear that there were a lot of people sucked into this and lost all their money. The deposits it looks like were from investors and the trader had set up some arrangement to trade people's money.

You can see that there were regular withdrawals.. you can see this in the graph below.. the vertical lines show this... this is most likely the trader taking his commission and in total he had extracted around $2 million

And then after May 31st, it all finished... a massive drop, the account losing 95% in 1 or 2 trades. All investors' funds are lost.

Now I know that I've labelled this as a scam and there will be some thinking that perhaps the trader had performed backtests for many years on this system without it ever failing and it was a series of extreme markets movements which had result in it's downfall. However, looking at the Gold price on which this system trades, there are no extreme moves. Not only that, if you dig around on Myforexbook, you will see that he has systems before which look similar and then they just stop updating.. this is likely because the systems had crashed and he had disconnected the account from Myforexbook so it didn't show the crash.. however, this time, he didn't disconnect it in time.

So I'd say that the person who was running this system (I don't believe his name is actually James Harrison) knew that at some point it would crash and the investors would eventually lose but he would continue to take out his commission. He was running an extremely aggressive trading system and extracting regular profits from it as commission until the fateful day.

Sadly a lot of people got caught in this and the dizzying returns that this system can generate will continue to attract people.

It is possible to make money if you have a withdrawal strategy and if you understand how these systems work and the risk. However, for most people, best keep away!

I'll have a future article on how to do your due diligence if you are looking for a managed account.

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Great article Lee, thanks for sharing! Please let me know if you have a link on that due diligence article you mentioned. Cheers, V.


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